chapter 12 the global cost and availability of capital - 副本.ppt

? 2012 Pearson Education, Inc. All rights reserved. 10-* Chapter 12 The global cost and availability of capital sissi Target Concepts of capital cost and availability The influential elements of capital cost WACC and CAPM Capital cost VS. availability CASE ANALYSIS Boomtown company intends to acquire National Gaming company. T: Facilitate capital flow (frequency) enhance financial situation A: cost of capital equity of shareholder (debt rate， price of stock) Capital Budget of acceptable item Background information Macdougall model： the difference of interest rates and expected profit margin nature of capital (p) principle: abundant to deficient low profit margin to high profit margin Residual cost frequency, return Concept Capital cost：required rate of return (lowest) after investment（expected rate of return demanded by investors） cost for acquiring and utilizing capital capital cost = required rate of return(报酬率，收益率) Capital availability Degree of difficulty to finance Channel of source(network) Total amount Quality of capital Issue S, L Loan fee OPP D I Exhibit 12.1 p308 Local market access VS. global market access What can you conclude from this picture? if Segmented capital market Illiquidity market How to achieve its goal? The influential elements of capital cost: MNE VS DE 1.Financial condition (size, favorable discount, no boundary, policy, interest rate, circulation ) e.g. EU capital market loan rate is low, saving rate is high. 2.Stability of return (diversification) 3.risk level(complicated situation, political risk, agency cost, asymmetric information) Conclusion : MNE VS DE P315, p326 P309 capital component (debt, preference stock, common stock, equity reserve ) K WACC= Ke E/V + Kd (1-t) D/V Ke cost of equity Kd before tax cost of debt t marginal tax rate D market value of firm’s equity V market value of firm’s debt CAPTIAL COST